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Serbia on Monday completed the disposal of a mobile phone network in the country’s largest privatisation deal to date, giving support to investor confidence in the face of lingering political problems.

The winning bid outstripped government expectations for the sale of the company, which recently came under state control after its private-sector main shareholder fled Serbia amid accusations of corruption. Privatisation officials said they had expected the auction would easily top €1bn, including the €220m licence price, but “not go this high”.

The brisk bidding “shows there are not so many assets left” in the regional telecoms market, said Martin Schlaff, head of an Austrian private-investment group that held 30 per cent of Mobi 63 prior to the sale. “Obviously the bidders who went so far strongly believe [in Serbia’s growth potential].”

Before the Mobi 63 sale, Serbia’s largest privatisation was the €518m sale of Nis Tobacco to US-based cigarette company Philip Morris in 2003.

Serbia – still nursing political wounds from its 1990s wars – trails behind its neighbours in free-market economic reforms. Yet some investors say the former Yugoslavia’s most populous republic is ripe for foreign investment as other ex-communist markets cool down.

Mr Schlaff said he would have liked to hold on to his Mobi 63 shares, though “not for that kind of money”. The government insisted he sell as part of the same package to a major strategic investor.

The Schlaff group had first bought into the local mobile service provider – known until four months ago as Mobtel Serbia – as majority owner, buying 51 per cent from a family company led by Serbian entrepreneur Boguljub Karic.

Mr Karic fell foul of the authorities and fled the country earlier this year to avoid bribery charges. The government – his co-owner and supposed partner – also accused him of hiding dividends from their joint venture.

In April, the government reached a debt settlement with Mr Schlaff, opening the way for re-privatisation under the new brand, Mobi 63, which has about 2.5m users.

Telenor officials said they were not worried about legal risks arising from Mr Karic’s former involvement.

Telekom Austria, however, said it declined to bid higher for Mobi 63 because it saw more promise in going after the expected third mobile network licence.